However, the new figures are better and given the new feel good factor bought on by the transfer window I thought I’d have a closer look.
It is important to stress that the Deloitte figures are a bit simplistic but they will do. Instead of demonstrating that our wage bill could cope with a few extra quality players which I did last time I thought I’d be a bit simplistic myself by looking at our position in the Premier League.
In my last article I pointed out that our wage bill was £54m and that given a good squad with 19 international standard players on £50kpw we would need a wage bill of somewhere in the region of £70m. Well our revenues have gone up to £115m which means that would leave us with a wages to revenues ratio of 67% which is good, we could afford a wage bill of £77m which means we can very realistically improve the quality of our squad. Which we appear to be doing.
We have consolidated our position of 7th in the financial league. With Spurs above us with a revenue of £178m. The gap below us to 8th has increased to Everton who brought in £99.5m.
The area of concern for me is that our commercial revenues has dropped by £2m. Now for me that is Llambias’s remit. If we are going to catch up with the others it has to come from commercial revenues. Matchday is limited by capacity and ticket price. Do I hear a clamour from the crowd to increase ticket prices in line with Arsenal? Thought not. TV revenue is dependant upon performance on the pitch so unless we get Champions League money we have to get it from commercialisation. I wrote an article which talked about global brand recognition which is an indicator of how much we can demand from sponsorship. Again we are well down on even Spurs. We are again valued at just under £100m whilst Spurs are £200m and Manchester United £850m.
So from the financial position 7th is where we are. The trouble is to catch up with 6th would take an increase of 55%. Which would require a four fold increase in commercial revenues if it all came from that stream. There are four clubs about 15% below us which is a much smaller gap. These are in order Everton, Villa, Fulham and Sunderland in 11th at £96.4m Below that the Deloitte report does not go.
So what does all this mean in layman’s terms. It means that we are in very good position. We still have room to free up our wage bill to bring in a few more good players. Whilst we are not going to challenge clubs that want to radically over pay players. Hence we didn’t bid for Zaha, and lost out to QPR for Remy. Liverpool, financially in fifth, could easily afford a wage bill double ours. We can however pay more than lots of continental clubs. This means we can bring in a player for good money and then increase it again if the establish themselves as first team players. Which appears to be the policy we have.
We should be challenging for Europe every season but not too surprised when we are not chasing 4th. Champions League is a bonus for us if we were to get it. However, we are vulnerable to the chasing pack if we get it wrong. Like this season.
Oh and 20th biggest (in terms of revenue) club in Europe? I’ll settle for that, for now.